Government’s solar water heater programme is collapsing

A solar water heater factory in Atlantis is on the brink of closure and its 85 employees have not been paid for three months, due to the collapse of government’s National Solar Water Heater programme.

At least six other solar water heater manufacturers countrywide are also facing job cuts.

The national programme started in 2010 as an Eskom rebate scheme to replace existing electrified geysers with solar water heaters in order to reduce the demand for power from the national grid. The initial target was one million solar water heaters by 2014. Only 400,000 units were installed under the rebate programme and in 2015 the Department of Energy (DOE) took it over and changed the focus to providing solar water heaters to state-subsidised and unelectrified homes, setting a new cumulative target of 1.75 million units by 2019, and five million by 2030.

The establishment and growth of the Isolar factory in Atlantis, and at least six other solar water heater manufacturers nationwide, was nurtured by the state programme, which also stipulated that 70% of the solar water heater components must be locally sourced.

But when presenting its annual performance plan to Parliament’s Portfolio Committee on Energy in April, the DOE said the 2018/19 budget for the National Solar Water Heater programme was R0. It was R394m in the last financial year. Yet, the department reported, only 87,000 solar water heaters had been manufactured. Furthermore, the installation phase of the programme had not taken place at all. The solar water heaters are sitting in various storage facilities around the country.

Isolar general manager Andre Fourie said the National Solar Water Heater programme was “in theory, beautiful”.

Fourie said it had allowed Isolar to grow from 15 employees in 2016, to 85.

But he said things had started imploding in November last year when, after the factory had delivered its last purchase order, no further orders came.

Later in December the company received a letter from the DOE asking about its capacity for repair and replacement of solar water heaters.

Fourie said he had believed the department was instituting the repair and replacement programme while “sorting out the political shenanigans” (former President Jacob Zuma had been ousted as president of the ANC in December, replaced by Cyril Ramaphosa, indicating a shift in power and the possibility of a cabinet reshuffle).

He said the repair and replacement programme had been included in the company’s tender award, so no new procurement was necessary. Briefing notes were sent, and the repair and replacement programme was due to begin on 6 February. This was then moved to 22 or 23 February, then to 15 March. Then all communication stopped. “There was nothing.”

In early April Isolar was informed the original tender cutoff date, 31 March, had been missed, which meant further requests for proposals related to supply, or repair and replacement, were cancelled.

Administrative staff manning the phones at Isolar on a voluntary basis and hoping for good news from the DOE, said that without salaries some of their colleagues were facing eviction from houses or rooms they rented as they were not able to pay their rents. Others had used their job to extricate themselves from the drug and gang culture suffusing poverty-stricken Atlantis and were now having to sit at home all day and were being dragged back into the underworld.

‘Every job loss is a concern to us’

Factory supervisor Jason Valentine, 37, who still arrives at the Isolar factory every day despite having nothing to do, said he lived with his girlfriend in her parents’ house. As she also worked at Isolar, neither of them were receiving an income and they were all being forced to live off her parents’ pensions.

“Things are getting difficult at the house. “Mens voel nie lekker nie (a person doesn’t feel good), you eat food that you can’t pay for.”

Valentine said he couldn’t get a loan to see them through because he didn’t know when, or if, they would get paid. Furthermore, he was expecting his first child to be born in six months.

Isolar administrators Shirmel Azure and Octavia Kotzee said the DOE still owed the company R40 million for the last order completed in November. And even if new orders were placed, relationships with suppliers to whom the company owed money would have to be built up again from scratch.

Another SWH manufacturer, based in Midrand, Gauteng, who asked not to be named, stated that the company was having to retrench 21 staff.

The company had grown from four employees in 2015 to 24 under the national programme, but had to cut back since the DOE had also failed to supply further orders in December last year.

Questions sent to the DOE over a week ago remain unanswered despite numerous follow-up. But unofficial sources we spoke to at the Africa Utility Week conference in May believe the National Solar Water Heater Programme budget was reclaimed by Treasury due to lack of expenditure and failure of the programme.

During the energy budget vote speech on 16 May, DA shadow minister for energy Tandeka Gqada said she believed part of the reason for the programme’s failure was that it had been moved around. First from Eskom to the DOE, then late last year to the Central Energy Fund supported by the Independent Power Producer (IPP) Office.

She said she had been in contact with three of the seven manufacturers who had won the bids to manufacture the solar water heaters. They had designed their work in line with the documents they had signed with the DOE and had invested a lot of money to deliver their orders. “With lack of clarity and communication from the department, these companies would likely close down,” said Gqada.

Responding to questions during the budget vote, deputy energy minister Thembisile Majola said the department was “very worried” about the seven companies but was “engaging with them”.

“We haven’t just let it go,” said Majola, “because every job loss is a concern to us.”

Meanwhile, the Western Cape ANC on Wednesday announced that Trade and Industry Minister Rob Davies, and Minister of Economic Development Ebrahim Patel, would speak to residents of Atlantis about a strategy to reduce the high levels of unemployment in the area.

Produced for GroundUp by West Cape News. Read the original article.